Posted on 06/15/2007 5:50:54 AM PDT by BenLurkin
WASHINGTON (AP) -- Consumer prices shot up at the fastest pace in 20 months in May, fueled by a surge in gas prices, although inflation pressures were moderate in most other areas. The Labor Department reported that its closely watched Consumer Price Index registered a 0.7 percent increase last month, the biggest advance since Hurricane Katrina shut down Gulf Coast oil production in the fall of 2005.
Outside of the volatile energy and food categories, inflation rose by a much more modest 0.1 percent. That was slightly lower than the 0.2 percent which had been expected and provided reassurance that this year's surge in energy costs has not spread to other parts of the economy.
Financial markets have been roiled in recent weeks by global inflation concerns. The yield on the benchmark 10-year Treasury security hit a five-year high earlier this week causing a steep dive in stock prices. Investors were worried that rising interest rates could prolong the troubles in the slumping housing market.
However, stocks have rebounded in the past two days as bond yields have edged down a bit. While investors have abandoned hopes that the Federal Reserve might cut interest rates this year, they are becoming more confident that moderate inflationary pressures will keep the central bank from raising the short-term rates that it controls.
In other economic news, the Commerce Department reported that the deficit in the current account, the broadest measure of foreign trade, increased to $192.6 billion in the January-to-March period, compared to $187.9 billion in the fourth quarter. The increase reflected a higher foreign oil bill. It was slightly below what analysts had been expecting.
Inflation isn’t bad at all if you don’t need food or gas. What a bogus crock these government reports are! They have no relationship to reality and only anger consumers who live in the real world and have to purchase food and gas.
And energy (read: gas) prices are already on the way down after the normal Memorial Day weekend peak.
Oh yeah—they forgot the “women and minorities hit hardest” tagline.
What happened here? I thought the gubmint doesn’t keep track of inflation in the more volatile (including energy and food) categories? /paleo
They always have measured them. These categories are not included in the so-called “core” CPI, however.
Being in the food industry I see a close correlation to energy costs.I doubt there’s another industry that reflects energy increases quicker.In recent years the two area’s that has dictated inflation the most has been in energy and in government spending !!!
Hey women are hit the hardest.....we typically do the shopping......LOL. : )
What are you talking about? Including food and energy, prices rose 0.7%. Is that real world enough or do you not understand what that means?
However, the great majority of us eat and consume energy every single day.
Sorry, but no.
http://tonto.eia.doe.gov/dnav/pet/hist/mg_rt_usm.htm
In May of 2000, the average price for a gallon of regular gas in the US was just under $1.49 a gallon. In May of 2007 it was almost $3.15 a gallon, for an increase of 111.6 percent (or about 13 percent per year annualized increase).
Now let’s look at the inflation figures for that time period...
Inflation (for all products) has varied between a low of 1.6 percent in 2002 to a high of 3.4 percent in 2005. So in reality, did fuel increases have THAT significant an effect? Yes and no—one of the largest reasons for the higher inflation rate in 2005 was the Katrina aftermath, to be sure, but increased spending and rapidly increasing GDP also tie into it as well.
If the economy runs too hot for too long, inflation will kick in. It’s a balancing act. You want the economy to expand, of course, but not at a constant 6-8 percent. That’s simply unsustainable. A healthy 3-4 percent GDP increase, usually maintained by interest rates, production in key industries, etc., keep inflation in check and also keep the economy humming along at the right level.
There’s a reason why the government leaves food and gasoline out of these “core” inflation figures . . . those two items in particular are subject to wild swings (in either direction) for reasons completely unrelated to government policy or underlying economic conditions.
Righto. Probably other sleight of hand tricks like smaller packages, different 'food basket' contents, higher co-pays, etc.
The water is heating on the middle class frog. Stealth inflation is another nail in their coffin absent from political debates.
Economic growth does not cause inflation. As long as the Fed doesn't expand the money supply faster than the rate of economic growth, inflation will not occur.
By removing the most volatile components of the CPI, energy and food, we learn what the underlying trends are. Inflation is trending down. That's why the DOW is up 100 points today.
Inflation isn’t bad at all if you don’t need food or gas.
But those DVD players at Wal-Mart sure are cheap!
I love the smell of ignorance.
I love bizarre posts that think they will be seen as brilliant when they actually say nothing, and make no point.
Yeah, and post #16 is a perfect example of that.
“What are you talking about? Including food and energy, prices rose 0.7%. Is that real world enough or do you not understand what that means?”
CPI excludes food and energy!!! After all my painstaking tutoring of you, you still don’t know what inflation is. If you bothered to read the report (http://www.bls.gov/news.release/cpi.nr0.htm)
you would see that energy was up 5.4% for May (petroleum based energy was up 9.8% for May) and food was up 0.3%. Quit spreading your ignorance.
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